Recall, Punj management had assured investors that it expects a favourable resolution, in response to auditor comments in FY2008 accounts, on the overstatement of revenues on this contract. The company had subsequently managed to recover Rs1B of the originaldisputed amount of Rs3B, but the balance had been kept in abeyance.

Now with the entire amount less likely to be recovered, the additional potential hit is to the tune of Rs3.2/share. Punj Lloyd remains vulnerable to prolongation and cancellation of M-E orders, given its high (25%) exposure to that geography.